Credit Saga

I believe I could blog almost every week about credit horror stories because they happen so frequently.  This week is no different.  I was recently asked by a bank employee to investigate if she could secure a mortgage.  She had been bankrupt a year ago and had a recent marital split.  Her bank employer would not approve her, even though she had worked for this bank for over 20 years. 

As a broker, I have lenders that will consider a situation like this. So, I took her application and drew a credit bureau.  Sure enough, she was three months from the end of the period where the bankruptcy shows on a credit bureau.  After a bankruptcy, a person must have perfect credit behaviour—that means no late payments, excessive use of credit or too many inquiries.  In her case none of this occurred, yet her rating was low.  After looking into it, we found out her ex-spouse had ordered a credit card and she was on his application.  She never knew about the card and he failed to make payments.   It was considered written off on her bureau too, which is why her score was so low. 

I thought initially I could easily help—now, it is going to involve hard work to get her over this hurdle and get her approved.

Credit "Horror Stories"

...And how to avoid them!

Being in the mortgage business for over 14 years, I have encountered many credit “horror stories.”  I would like to share a few different situations that you may be experiencing, or can watch out for to avoid repeating these mistakes:

A) If you decide to claim bankruptcy, student loans are not considered a “forgivable” debt.  Do not stop paying or you will find getting a mortgage will be nearly impossible for a considerable period of time.  (Also, watch out for a blog entry in following weeks all about bankruptcy).

B) Even one single late payment on a credit card damages your chances of being able to purchase a home for up to a year thereafter.

C) Do not make payments to credit cards online too close to the due date.  Allow time for the payment to be received and posted (3 business days at least, weekends don’t count).

D) Typically, VISA and MasterCard are more “forgiving” when it comes to late payments.  Be wary with cards like Sears, CTC, HBC, gas station cards (Esso), etc, because if you are even one minute late from the due date, these credit companies will often record and penalize you, lowering your credit score.\

Overall, keep paying student loans, make credit payments in advance to due dates, and watch out for less mainstream credit cards and their policies regarding lateness and penalty.  If you have more questions, or would like any advice or more information about your specific “horror story,” please e-mail me at slaney81@gmail.com or call 519-426-9842.

[Cartoon from http://misstrade.files.wordpress.com/2007/08/englehart.jpg]